Cable Chief ‘Bullish’ Despite $17m Losses

Cable Bahamas’ top executive yesterday said the company remains “very bullish” on its growth and future earnings prospects, despite suffering a near-$17 million net loss for the 2017 first quarter.

Anthony Butler, the BISX-listed communications provider’s president and chief executive, told Tribune Business that it remained on course to deliver significant shareholder returns as it continues to invest for future reward.

He indicated that Cable Bahamas’ share of start-up costs in Aliv, the new mobile operator in which it holds a 48.25 per cent equity stake and management control, was depressing its financial performance in the short-term.

And depreciation associated with Aliv’s network assets, especially its tower sites, is also impacting Cable Bahamas’ financials, having increased year-over-year by 83.5 per cent for the three months to end-March 31, 2017.

“We’re still targeting a 25-30 per cent share on mobile by year-end,” Mr Butler told this newspaper of Aliv’s anticipated performance. “We’re delighted we’ve got over 60,000 subscribers on the network. But obviously there’s a start-up cost and the depreciation.”

He was speaking after Cable Bahamas suffered a near-$18.4 million negative year-over-year swing, going from a $1.53 million profit in the 2016 first quarter to a $16.862 million net loss this year.

And the BISX-listed operator, which is in the process of changing its year-end from December to June, released financials that also showed it has incurred net losses of $33.43 million in the 15 months to end-March 2017.

This compares to $14.371 million worth of ‘red ink’ incurred in the 2015 calendar year, and the ongoing losses have the potential unnerve both Cable Bahamas shareholders - especially retail investors - and the wider capital markets.

This is particularly since Cable Bahamas has suspended dividend payments, as it seeks to conserve capital to finance its expansion plans, which apart from Aliv also involve $100 million worth of Florida-based acquisitions.

Cable Bahamas is still effectively investing for projected future gains and shareholder returns tomorrow, which have yet to materialise - although they should now be much closer and start to come through in 2018.

In the meantime, as it waits for profits and returns to come through on the back-end, the company is having to ‘eat’ its share of Aliv’s start-up losses, which stood at $9.718 million for the three months to end-March 2017.

These losses were not there in the 2016 first quarter as Aliv did not exist then, which explains much of the $18.4 million year-over-year swing into losses.

Another key factor was the more than-$7.5 million rise in depreciation and amortisation, associated with accounting treatment mark downs on the increased network infrastructure associated with Aliv. Depreciation, as a result, jumped from $9.147 million in the 2016 first quarter to $16.782 million this time around.

And it is also unclear whether Cable Bahamas was still incurring Hurricane Matthew-related repair costs into the 2017 first quarter, or whether these were contained solely in its 15-month figures.

The key now is for Cable Bahamas to properly, and fully, execute on its growth initiatives. Mr Butler said yesterday: “We’ll have our full market position [through Aliv] in the next 24-36 months.

“We will then become the quadruple player with the most advanced network. We now have a Florida network that’s providing us with revenue, and we’re very bullish our future and our position in a very competitive market.”

Tribune Business understands that Cable Bahamas has been seeing “double digit” growth in revenues and margins, both in its Florida business and in its core Bahamian markets.

Mr Butler did not comment on that, but explained that Cable Bahamas’ Summit Broadband affiliate in Florida was targeting high-end residential communities, resorts and hospitals with its bundle of services.

“We could go down a street in Nassau and get 60 per cent penetration. Over there, it’s 100 per cent on a long-term contract.”

Cable Bahamas’ revenues for the first quarter year-over-year were up by 17 per cent, standing at $51.141 million compared to $43.68 million last year.

While some of its expansion is now coming through on the top-line, the BISX-listed operator’s expenses also rose due to start-up costs, jumping by 60.7 per cent to $46.608 million compared to $28.995 million the year before.

Comments

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